Homeowners convert consumer debt into tax-deductible debt through home equity lines of credit. Since this debt is secured by real estate, homeowners also pay much less for it.

HELOCs are making a comeback! This is great news for Ponzis who want free money from stupid lenders, but it’s a dangerous warning for all of us who supplied taxpayer bailout money to the stupid bankers who gave out free money last time.

With rates hovering near record lows, and with banks desperate to loan money, banks are offering those with good credit very favorable terms on helocs — and borrowers take the free money. Ten years ago heloc lending was an open invitation to theft for millions of borrowers running personal Ponzi schemes. Since lenders confidence in helocs rises with house prices, and since lenders believe their high FICO score borrowers won’t burn them, lenders are willing to risk reigniting the mania that inflated the housing bubble leading to a painful crash and more taxpayer bailouts.

Everyone who doesn’t want to subsidize their neighbors reckless spending should be wary of a return to a HELOC dependent economy and lifestyle.

One of the most galling features of heloc borrowing is the gross unfairness of its implementation. Obtaining a home equity line of credit requires owning a home, which means 40% of Americans simply don’t have access to this money at all. Further, it requires having enough equity in the home so that the total indebtedness is less than 80% (or 90% with some lenders) of the total home value. This eliminates another 20% or more of Americans. That leaves this potential benefit available to a minority of the American people.

So what? Who cares if these loans are only available to a small minority?

Well, if these were private loans without any government subsidies, I probably wouldn’t care, but that’s not what these are. The interest paid on helocs up to $100,000 are completely tax deductible.In other words, those of us who don’t have helocs subsidize those that do. In addition, heloc borrowers obtain very favorable interest rates. While renters often pay 10% or more on credit card debt, heloc borrowers often pay less than 5%, and they get the tax break.

Is heloc borrowing so desirable that the rest of us should pay for it?

As the broader mortgage market remains in the doldrums, banks are again touting home-equity lines of credit, …
Lenders are betting that offers for home-equity lines of credit, or helocs, will resonate with many borrowers whose home values are higher than they were just a couple of years ago and who need cash for renovations or other expenses after holding on to their homes for longer than expected.

Or other expenses? What do you suppose those would be?

HELOC abusers were easy to spot back in 2005 and 2006. It’s relatively easy to evaluate general level of income in a neighborhood by the quality of the houses and the cars in the driveway. It was common to see two new luxury cars in the driveway even in less affluent neighborhoods, a classic sign of HELOC abuse. Most people would park their luxury cars in the garage, but if the garage is full of useless crap bought with HELOC money, the owners would be forced to park their fancy cars outside. Some may not have had garages full of HELOC booty, merely parking their fancy cars outside to show off to the neighbors.

Lenders extended just over $156 billion in home-equity lines of credit last year, the largest dollar amount since 2007, the beginning of the housing bust…. That marks a 24% increase from 2014 and a 138% spike from 2010 when new approvals hit a low point.

The average line amount extended to homeowners last year reached a record $119,790, according to the firm, which tracks the data back to 2002.

“Lenders are opening up their spigots,” said Sam Khater, deputy chief economist at CoreLogic. …

I doubt we witness the same level of Ponzi theft this time around. During the housing bubble, lenders offered borrowers the ability to refinance at lower interest rates, allowing borrowers to extract their equity often without increasing their monthly payments. From a borrower’s perspective, this really was free money. Since we are at the bottom of the interest rate cycle, future heloc borrowers won’t enjoy lower interest rates to refinance and keep the same monthly payment; therefore, HELOC booty will have a cost this time. If the borrowed money has a real cost, far fewer people will take it–and those borrowers won’t extract nearly as much money due to qualification barriers. Borrowers can no longer fabricate an income number to justify the loan, curtailing Ponzi borrowing, which inevitably leads to a crash.

The push from banks marks a reversal of strategy for many of them. Lenders scaled back on giving out second liens in the wake of the housing downturn, and many cut existing credit lines to avoid new defaults. Some lenders exited the home-equity lending market entirely. …

J.P. Morgan Chase & Co. began reaching out to customers in January about the benefits of cash-out refinances, saying the move is often a smart way to tackle home repairs, debt consolidation and tuition payments. The campaign is a first for the bank, said a spokeswoman.

We will see a continuation of debt consolidation loans on HELOCs. It makes sense financially to consolidate high-interest credit card debt on a low-interest HELOC; however, it’s foolish to run up the credit card debt in the first place. Financing short-term consumption with long-term debt is never a good idea. Debt consolidation is a one-time fix for those who see the light and stop using their credit cards. It’s a terrible way to routinely plan finances, which many people do anyway.

Home-equity lines can be risky because they generally have variable interest rates, which could rise, leading to larger monthly payments for borrowers. Many home-equity lines are also structured in a way that allows borrowers to put off principal payments for the first 10 years. Once principal is due, payments can jump by hundreds or thousands of dollars. For banks, these payment shocks could lead to an increase in delinquencies many years after they have given out the loans.

Over the last several years, as loans reset, the interest rates were lower, so the reset didn’t cause a problem. However, many of these loans also recast, which means they converted from interest-only to amortizing loans. The recasting loans all require much higher payments, unless the lender kicks the can. Ten years from now when the current crop of helocs is due to reset or recast, interest rates will likely be higher, and many borrowers will endure jarring payment shocks. (See: 250,000 HELOCs due to recast in Orange and LA Counties)

Lenders are requiring higher credit scores this time around, and in most cases borrowers must have at least 20% equity left in their home after receiving the credit line. The average weighted FICO score for borrowers who received a home-equity line in the fourth quarter of 2015 was 781, on a scale that ranges from 300 to 850, compared with 742 for the same period in 2005, according to Black Knight Financial Services, a mortgage-data firm.

Vicki Boddy and her husband, Mike, received a $125,000 home-equity line of credit from J.P. Morgan in February, after their home was appraised at $447,000.

The Boddys have lived in the same home in Kenmore, Wash., for the past 23 years. They wanted to renovate the kitchen and other parts of the home, and chose to borrow rather than use savings to pay for it.

“Having the heloc means we can use the money in savings for reserves and a vacation to go visit our kids,” she said.

Notice how easily people forget the money is fungible, meaning it can be easily interchanged with other uses. While this couple may indeed spend the heloc on home improvements, this loan freed up capital that they can then spend on consumer goods like vacations. How is that different in any way from the spendthrift who uses that heloc money directly to buy consumer goods? Obviously, it isn’t any different. And as a taxpayer, I find it outrageous that we subsidize consumer spending this way.

Promoting heloc abuse is no different today than it was ten years ago when everyone lost their minds — and later their houses. It was foolish then, and it’s foolish now, making a government subsidy for this behavior a travesty.

COSTA MESA – The city could see some changes to its Westside after the approval of three housing developments with a total of 49 units.

The largest project has 33 two-story detached homes on nearly four acres off Harbor Boulevard and Merrimac Way, at the site of a former car dealership. The others are higher density projects in residential neighborhoods off the major thoroughfare.

“Converting an antiquated, outdated car dealership into detached living opportunities for folks with 50 percent open space in Costa Mesa – I think is a wonderful transformation,” said Planning Commissioner Colin McCarthy during the Monday night meeting.

The Commission voted 3-0 to approve the project, with Commissioners Tim Sesler and Jeff Mathews absent.

Local Realtor Christine Donovan said the projects are indicative of a wave of development hitting the Westside.

“I think part of it is there is a lot of pent-up demand,” Donovan said. “There hasn’t been that much building in Costa Mesa in years because we’re so built out.”

“When you look at everything that’s available, the Westside is less expensive than a lot of the areas in Costa Mesa,” she added. “I think that’s part of the attraction for builders and developers.”

Donovan also noted the Westside is seeing more residential development in former industrial and commercial areas and higher density projects, such as three-story homes, than in the Eastside. Part of that is due to development incentives included in the city’s plans for particular neighborhoods.

With its location on the bustling Harbor Boulevard, the entrance to the 33-home complex will be off Merrimac Way. The development will have a park – with barbeques and play areas – on the side closest to Harbor to act as a buffer.

The homes, built by DeNova, would come in three styles: Spanish, plantation and modern farmhouse.

The owner had different plans previously approved, which had the homes laid out differently, with less open space and non-garage parking. Back then, the project was re-zoned residential from commercial.

For another project, the landowner wanted to swap one-story 1960s apartments off Hamilton Street and Harbor for six two-story, “ranch-style” detached homes with two- and three-car garages.

Although the project was OK’d on a 2-1 vote, with Commissioner Stephan Andranian dissenting, it’s unclear if it will move forward. The commissioners did not agree to waive a requirement to underground utilities, which the landowner said could derail the project.

Commmission Chairman Robert Dickson Jr. said he hoped it “doesn’t kill the project.”

A higher density project off Bernard and Charle streets got the green-light, too.

The project, from Planet Home Living, calls for tearing down one-story bungalow-style apartments built in 1948 and replacing them with 10 detached two- and three-story homes. Commissioners went back and forth about proposed changes to some requirements, such as parking and setbacks.

“I don’t see really my support for this project as it is right now,” Andranian said. “It’s not meeting the minimums that the city has set forth.”

But McCarthy said the project’s positives outweighed the negatives, noting it was a “significant improvement” over a previously approved project at the site that the owner “could go build tomorrow.”

Costa Mesa is one of the older areas, well located, that is gentrifying one house at a time. Builders buy old houses, tear them down, and build new ones. We looked at quite a few when we were shopping. It makes for quite eclectic streets with new two-level houses next to old single-level houses, with power/phone lines dotting the skyline.

While his speaking may be rambling and disorganized, I don’t think you can argue it isn’t effective. I think its very effective. His whole campaign is that he isn’t a polished politico, a stuffed suit who’s a meat puppet of the establishment. His off-the-cuff remarks play to his strengths with the common man.

By “common man,” you mean the Poorly Educated who love him. Yes, he has them wrapped around his tiny finger. I think any blowhard candidate could get a third of the US population’s support with the simple platform of: pro-Jesus, pro-guns, and scapegoating.

Peter Berkowitz is my new favorite guy. The 25-year-old illustrator recently moved to San Francisco and instead of settling for some landlord’s price-gouging, he found some other cool kids who let him build a box in their living room. Peter’s rent is just $400 a month.

That sounds good to me! The median rent for a one bedroom apartment in San Francisco is a stunning $3,670 a month, and a bedroom in a shared apartment will set you back at least $1,500 for a decent location on the peninsula. And if you have to battle it out with all of the other recent college graduates from Craigslist for that room, you’re probably going to need to bribe somebody, too. I’ve heard it’s pretty standard to bring a gift like wine or envelopes full of cash when you show up to check out a room. Sometimes the resident roommates invite all of the prospective roommates for a demented party to see who they like. It’s like fraternity rush for desperate assholes.

But this box-in-the-living room idea, now that’s something I can get behind. You’re lucky to have any space at all to yourself in San Francisco’s housing shortage, but it’s damn near impossible to find such a cozy little sleep pod like this. Peter built the thing with his bare hands for only $1,300 and even included a little window and some fairy lights so that it feels less like coffin and more like a magical escape from the dystopia that is the city by the bay. It’s eight feet by 3.5 feet (a little longer and wider than a coffin). The real perk though is that it’s 4.5 feet tall (much taller than a coffin). And look, there’s a cute little shelf for his MacBook.

One time I lived in a closet in London for £250 a month, roughly the same as what Peter’s paying for his box. I was able to stand up straight in my closet, but I was not able to stretch my arms out in both directions. It was no problem, though, because I was broke as hell and got to use the living room from time-to-time. I even had a girlfriend for a little while.

In all seriousness, it’s absurd that Frisco living has come to this. It’s bad for everyone who’s not some overpaid Facebook employee, and it’s bad for America. The housing crisis also isn’t entirely the tech companies’ fault, although they could be doing a lot more to fix it. Take a hint from Peter. He seems like a real get-up-and-go guy. Well, more like get-up-slightly-hunched-over-and-crawl-out-of-your-box-and-into-a-living-room kind of guy. I like this guy.

Housing is in such demand because there are more jobs than houses, and they refuse to allow construction of more houses. Eventually, probably even now, this will cause businesses to flee the area because they can’t afford to pay people enough to cover the cost of living.

Have you been to SF lately? There is more construction now than any time since the 1960s. Something north of 40,000 units are in construction or approved. My own neighborhood has four different 5+ story apartment buildings being built right now or finished within the last year.

The economy is in the midst of a massive, fake-ish boom due to what will turn out, I expect, to be a lot of mal-investment. There are at least four companies here paying 20-somethings 150k+ to develop apps for custom laundry service and delivery. I’m serious.

And lastly, why would someone pay to live in a box in SF? There are lovely, much more affordable apartments, on the BART line in places like Concord and Pleasanton. Guess you just gotta have that hipster lifestyle.

The SF economy did this in 2000 as well. Then rents went down. A lot. I remember back then idiots writing love-letters to landlords so they could rent a run-down studio with crack dealers outside. Same as it ever was.

A recent press release points to U.S. real estate as particularly sound given the current overall uncertain climate globally.

And while the release is short on solid data, the talking points bear reading.

Take this quote as an example:

“Notwithstanding the geopolitical and monetary risks is many countries, the United States continues to attract capital as both a safe haven and one with superior returns to other global markets,” says James Kuhn, president of Newmark Grubb Knight Frank, one of the largest commercial real estate service firms in the world.

“With more than $80 billion invested in the U.S. in 2015, including 60% from China, Canada, Singapore Norway and the UAE, it has filled a hole in core and core-plus investments,” Kuhn said, “while those investors previously filling that space are looking in secondary markets or pulling back entirety as acceptable yields in the gateway cities are becoming problematic.”

This explanation is from the RICS press release and it’s pretty good:

With regular flows across borders (and oceans), controlling risk is also even more relevant and important now as real estate investment becomes increasingly global. Despite its uncertainties, real estate is seen as a relatively safe haven in the complex international investment world. Therefore, real estate investment decisions now affect many more people, with an increasing portion of retirement funds and large investment fund asset groups now looking to real estate for security. For example, TIAA-CREF, a trendsetter in this area, now fields a real estate division.

And former U.S. Treasury Secretary Lawrence Summers points out that the investment profession itself can take significant steps itself to reduce risk.

“Real estate professionals who take the long view by warning their clients against buying at unsustainable highs or selling at unreasonable lows can help dampen the inevitable swings between optimism and pessimism that characterize all asset markets, including real estate,” he says.

Andrew Bailey has unfinished business. The chief executive of one of Britain’s top regulatory bodies has been working at the Bank of England for more than three decades.

He will shortly leave the Prudential Regulation Authority and move four miles east to lead the City watchdog, the Financial Conduct Authority, in Canary Wharf. But he insists there is always more work to be done.

Today, it is the buy-to-let market. The PRA has published new guidelines it hopes will ensure all lenders meet the bar it has set on underwriting standards on buy-to-let loans.

It also wants to ensure banks are prepared for anything the global economy may throw at them, with new stress test guidelines to be conducted later this year.

The crackdown on landlords has intensified in recent months. Last year, George Osborne, the Chancellor of the Exchequer, set out plans to restrict mortgage interest rate relief for landlords from 2017.

Anyone who owns more than one property also faces a 3pc stamp duty surcharge on purchases from next month.

But while some may view the moves as an attempt to discourage buy-to-let investment, Bailey insists this is far from the case.

After all, with home ownership becoming increasingly unaffordable, a rise in the number of renters needs to be met by a supply of properties.

For Bailey and his fellow regulators, the aim has always been to steer the UK away from the boom-bust cycle so devastating in the past.

“We have nothing against people wanting to hold their asset portfolio in the form of buy-to-let,” he says.

“What I’d say, though, is we want sustainable asset markets. I don’t think it benefits anybody, including people who own buy-to-let properties, to have an unsustainable boom-bust cycle in the UK property market. I’ve been in the Bank for 30 years and I’ve seen two of them. I’m very keen to not see a third.”

It is also important, Bailey insists, that landlords, tenants and all households have “reasonable confidence that they’re not going to see unsustainable and very volatile boom-bust conditions in the asset market they are investing in.”

Sustainability; affordability; avoiding the mistakes of the past: these are all themes the Bank has repeated over again as it configures its post-crisis regulation toolbox.

But alongside new tools have come structural changes, including an ageing population that can expect less generous pension payouts than previous generations.

Defined benefit schemes, which guarantee a minimum level of income on retirement, have all but disappeared in the private sector.

In a world of low inflation and low interest rates, annuity payments have also been weak.

The Chancellor’s decision last April to end compulsory annuitisation means more people may choose to invest in property rather than traditional pension vehicles to make money.

A report by the Council of Mortgage Lenders at the end of last year suggested there had already been a considerable decrease in annuity sales, suggesting, it said, that retirees “are opting against a guaranteed, secure income for life, with potentially serious implications for their future financial resilience.”

Diane Coyle, in reviewing Rowan Moore’s book Slow Burn City: London in the 21st Century, focuses on the idea that forever rising house prices could gradually kill off what is now a vibrant city. As housing gets steadily more expensive, getting people to work there will get more and more difficult. In the meantime, young people who can afford to buy get more and more into debt. I wonder whether soon mortgage providers will become more interested in the wealth of borrowers parents than in the borrower’s own earning capacity. (This is not just a London problem: see here about New York for example.)

The reason for this that everyone focuses on, understandably, is stagnant housing supply. However, housing can also be seen as an asset. Just as low real interest rates boost the stock market because a given stream of expected future dividends looks more attractive, much the same is true of housing (where dividends become rents). Stock prices can rise because expected future profitability increases, but they can also rise because expected real interest rates fall. With housing increasingly used as an asset for the wealthy, or even as a way of saving for retirement, house prices will behave in a similar way. A shortage of housing supply relative to demand raises rents, but even if rents stayed the same falling expected real interest rates raise house prices because those rents become more valuable compared to the falling returns from alternative forms of wealth.

That is why a good part of the house price problem comes from the macroeconomy: not just current low real interest rates, but also low expected rates (secular stagnation). The idea that house prices are tied down by the ability of first time buyers to borrow (and therefore to real wages or productivity, modified by changes in the risks lenders were willing to take) seems appropriate to a world where the importance of the very wealthy was declining, and most people could imagine owning their own home. We now seem to be moving to a more traditional world (remember Piketty) where wealth is more dominant, and with low interest rates that may also be a world where renting rather than home ownership becomes the norm for those who are not wealthy and whose parents are not wealthy.

There may be factors behind secular stagnation (low long term real interest rates) that we can do little about, but there are things we can do right now that will raise interest rates, and thereby tend to lower house prices. The most important of those is to stop taking demand out of the economy through continuing fiscal consolidation (aka austerity). This boost to demand that comes from ending fiscal consolidation will allow central banks to raise interest rates more quickly. While central banks may only be able to influence real interest rates in the short term, because so much uncertainty exists about what this long term involves the short term may have a powerful influence on more distant expectations.

We can also have some positive influence on the longer term by increasing public investment, including forms of public spending (that may not be classified as investment) that encourage private investment. It should also include building houses where (or of a kind) the private sector will not build. That will have beneficial effects in terms of raising real interest rates in both the short and longer term.

Ever rising house prices lead to unprecedented high levels of private debt, and also destroy the dream of many young people to own their own home. One answer is to build more houses, but another is to run better macroeconomic policies. That house prices continue to rise during a period of fiscal austerity is not an anachronism. It is not a bug but a feature of an age of austerity.

Developers have started canceling projects, slashing prices and offering incentives such as private-jet access to spur sales, an ominous echo of the housing crash that pounded South Florida especially hard.

Easy financing and rising prices prompted developers to build about 21,000 condos in the downtown Miami area from 2004 to 2008. Many of those units sat empty for years.

Developers say this time they have insulated themselves by requiring buyers to put down 50% deposits by the time buildings break ground and by canceling projects instead of moving forward as the market slows.

Still, it may not be easy for some to sidestep the damage. In the fourth quarter of 2015, the number of Miami Beach condo transactions declined nearly 20% from a year earlier, while inventory jumped by nearly a third, according to a report from appraisal firm Miller Samuel Inc. The median sales price slipped 6.6%, according to the report.

“The condo market has peaked,” said Neisen Kasdin, a real-estate development lawyer at Akerman LLP in Miami. “Sales velocity has slowed down considerably.”

Many of the forces buffeting the Miami market are also hitting luxury markets in New York, Southern California, Australia and London. A strong U.S. dollar and weakening local currencies, dropping oil prices and global economic turbulence have crimped the buying power of foreign investors.

The CEO of KB Homes, the eighth-largest homebuilder in the US, perfectly sums up nearly all of the problems facing the housing market today.

On the company’s quarterly earnings call, CEO Jeff Mezger had this to say:

Over the last three years, it’s kind of interesting, our first-time buyer mix has ranged right around 50% for the last three years, and if you put that in the context of how much our average selling price has lifted, I think it’s over $100,000 in that period. It shows you how we’ve been able to flex and find a first-time buyer in these higher income more desirable sub-markets where they have an easier time getting the mortgage and underwriting is getting easier, but it’s not easy yet.

There’s a lot to unpack, but let’s dive in.

The first thing Mezger hits on is that first-time home-buyer business is way down. For KB Homes, the percentage of buyers who are making their first purchase has dropped from around 60% to 70% in 2008 and 2009 to just 50% now.

Now there are many explanations for this, from the mind-set shift of millennials to lower wage growth, but Mezger notes one important piece: credit.

Many would-be homeowners have shied away from taking on the debt associated with buying a home, whether for psychological or financial reasons. In Mezger’s assessment, this is a big part of the reason the homeownership rate is at historic lows.

Secondly, Mezger notes that the price point for a first-time homebuyer has increased by over $100,000. This reflects the fact that new housing starts are well below the pre-crisis and historic recovery averages. The lack of new homes has driven prices up.

Mezger also hits on the post-crisis trend of Americans moving from the suburbs to cities in his “higher income more desirable sub-markets” comment.

For the past few years people have trended away from the suburbs and toward the cities in search of jobs. This has made it difficult for suppliers to keep up with demand, said Mezger.

“And our choice right now is to continue to target those areas that are more land constrained, so it’s harder to bring things to market,” he said in the call.

America’s baby boomers, even as they increasingly enter retirement, continue to dominate our political economy in ways no previous group of elderly has done. Sadly, their impact has also proven toxic, presenting our beleaguered electorate a likely Hobbesian presidential choice between a disliked, and distrusted, political veteran and a billionaire agitator most Americans find scary.

Throughout the campaign, boomers have provided the bedrock of support for both Hillary Clinton and Donald Trump. Bernie Sanders may have devastated Clinton among millennial voters, by almost 3-1, but she has more than offset that gap by winning overwhelming support from older voters.

In the South, it was older African Americans, particularly women, who sealed Clinton’s big wins. But older voters of all races have supercharged her campaign elsewhere; she won older voters by 39 percentage points in Missouri and 54 points in Ohio. She also captured upward of 73 percent of their votes in critical states like Virginia.

No surprise that she also did well in Arizona and Florida, states that are major retirement havens. Four of the five areas with the most retirees per capita are located in these two states.

But it’s Donald Trump who arguably was the biggest winner in the boomer wars. He has thrived most in states with aging white populations, notably Nevada, Arizona, Florida, Massachusetts, New Hampshire and South Carolina. He has consistently run five to 15 points better with the boomer generation than among younger GOP primary voters.

Some of this preference is attributable to racist and xenophobic sentiments among older people, who are, for example, typically far less favorable toward inter-racial dating than younger cohorts. Similarly, boomers are far more likely than millennials to harbor patriotic sentiments; only a third of them believe America is the greatest country in the world, compared with half of boomers. Trump’s appeal to “Make America great again” may connect with boomers, but not so much with their offspring.

German Interior Minister Thomas de Maiziere said he is planning a new law that will require refugees to learn German and integrate into society, or else lose their permanent right of residence.

The initiative comes after voters punished Chancellor Angela Merkel’s conservatives in regional elections earlier this month, giving a thumbs-down to her open-door refugee policy and turning in droves to the anti-immigrant party Alternative for Germany (AfD).

Around 1 million migrants arrived in Germany last year – many fleeing conflict and economic hardship in the Middle East and Africa – and de Maiziere said around 100,000 more had arrived so far this year.

Germany expected that in return for language lessons, social benefits and housing, the new arrivals made an effort to integrate, he told ARD television.

“For those who refuse to learn German, for those who refuse to allow their relatives to integrate – for instance women or girls – for those who reject job offers: for them, there cannot be an unlimited settlement permit after three years,” he said.

De Maiziere, who belongs to Merkel’s conservatives party, added that he wanted “a link between successful integration and the permission for how long one is allowed to stay in Germany.”

Vice Chancellor Sigmar Gabriel welcomed the draft law, which is planned for May.

“We must not only support integration but demand it,” Gabriel told mass-selling daily Bild.

Gabriel’s Social Democrats, the junior partner in Germany’s ruling coalition with Merkel’s conservatives, also suffered losses in this month’s elections in three German states.

It was time to trade an Old City condo for a townhouse large enough to accommodate their three growing children. But dentist Brad Pirok and veterinarian Maya Pirok had been spending considerable capital building up their practices, and so were in the market for a mortgage that took their situations into account.

Two years ago, Maya opened Northern Liberties Veterinary Center, which “required a lot of emotional, financial, and physical capital,” as Brad put it – something common among medical practitioners.

For the Piroks, the answer was the “physician’s loan,” a mortgage designed for medical doctors, dentists, osteopaths, and, in some cases, podiatrists and optometrists.

“Unfortunately, the loan isn’t as well-publicized as it might be,” said Brad Pirok, whose Pennsylvania Dental Group has offices in University City and at Graduate Hospital. Because new doctors spend much of what they earn repaying education loans and building their practices, “it allows us to get on with our lives, including raising families.”

The couple settled on a townhouse in Old City a week ago.

The concept behind such mortgages is that while newly minted doctors and dentists are carrying a lot of debt and not making much money, they are guaranteed to be high earners in the future.

Thus, offering low or no down payments, forgoing private mortgage insurance, and not including educational debt in the calculations is a win-win situation for borrowers and lenders alike.

John Cross, regional sales executive at Bank of America, the first to offer the mortgages a decade ago, said “the evidence shows the default rates as almost nil.”

“This is the pivotal point of their professional careers,” Cross said, “and it allows us to stay with them,” involved in other financial aspects of their practices.

“Our goal is to become their mortgage loan officers for life,” he said.

Though many lenders in the program – six in Pennsylvania, four in New Jersey, listed at http://www.doctorloanprograms.com – offer mortgages to those who have been in practice for seven to 10 years, the focus is on the newbie.

This is especially true in March, which includes “Match Week,” when graduating medical students vie for places in residency programs throughout the United States.

This year, 18,000 medical school seniors and 17,000 other applicants competed for 30,000 positions at more than 4,800 residency programs. These days, many look to buy rather than rent within easy commuting distance of their hospitals.

“It happens very quickly,” Cross said. “They need a place to live,” and physician’s loans take quick closings into consideration.

Jerome Scarpello, president of Leo Mortgage in Ambler, said lenders that do physician’s mortgages typically require only 10 percent down or less and are “self-insured,” and so don’t need traditional private mortgage insurance.

Banks will lend up to $417,000 for medical residents, interns, and fellows, and up to $1 million for those who have completed residencies within the last five years.

Financial-reserve requirements are also more lenient, Scarpello said. Some mortgages typically require post-closing liquidity thresholds, but the physician’s loans allow use of retirement accounts to meet the reserve criteria.

In addition, student loans deferred more than one year can be omitted in debt-to-income ratios. Normal loans would count the debt and potentially lower the amount for which a home buyer would qualify, he said.

Real estate agents find these loans “straightforward and streamlined,” said Michael Duffy, of Duffy Real Estate in Narberth, who recently did his first transaction using one.

Digital First Media, the new owner of the Orange County Register, has parted ways with several members of prior owner Freedom Communications Inc.’s senior management team, according to sources close to the matter.

The moves apparently came hours after a U.S. Bankruptcy Court in Santa Ana approved the sale of Freedom to Digital First for $49.8 million, about $2 million less than an originally agreed-upon price. The difference was attributed to “certain newly discovered facts,” according to court documents, which didn’t offer details.

Among the executives parting ways with the daily newspaper are Editor and Senior Vice President of Content Rob Curley; Vice President of Circulation Bruce Blair; and Lake Trout, senior vice president of sales who oversaw “majors/nationals, local retail, automotive, recruitment, real estate and digital advertising” for the Register and the Press-Enterprise in Riverside, owned by Freedom since 2013.

It’s unknown whether any of the executives have been replaced.

Also unclear is the fate of other members of Freedom’s upper management team, including Chief Executive Richard Mirman, and Chief Financial Officer Chris Dahl and Richard Sant, the vice president of operations since 1975—remains unknown.

The two dailies are now part of Digital First’s new Southern California News Group headed by Publisher and President Ron Hasse. He is expected to visit the Register’s headquarters in Santa Ana today to address employees.